The Society for Economic Research on Copyright Issues

Review of Economic Research on Copyright Issues (RERCI)

RERCI Articles

Getting Pricing Right on Digital Music Copyright

Review of Economic Research on Copyright Issues, 2018, 15(2), 1-22

Joshua S. Gans

Downloads:  1189


This paper provides an overview of economic approaches to the pricing of mechanical royalties for copy-protected music works. It argues that principles for such pricing can be provided usefully from principles of pricing access to essential facilities. In particular, the structure of the royalty should be such that the royalty level does not change if the business model of downstream entities (notably, digital music streaming platforms) changes (i.e., neutrality) and the level of the royalty should ensure that the copyright holders receive a return in excess of their next best alternative in reaching consumers (i.e., opportunity cost). Ways of using benchmarking to derive the relevant opportunity cost are then discussed including the use of methods inspired by economic bargaining approaches such as the Shapley Value.

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What We Know, What We Don't Know, and What Policy-makers Would Like Us to Know About the Economics of Copyright

Review of Economic Research on Copyright Issues, Vol. 8, No. 2, 101-120, 2011

Ruth Towse

Downloads:  1150


There are many gaps between what economists know and what they don't know. This article reviews this situation in the light of what policy-makers say they want to know about the economic effects of copyright. The article sets out what I see as misunderstandings on the part of policy-makers as to what economics can offer in the way of evidence on copyright. The paper is based on my limited experience of advising and consulting as well as on reading calls for evidence in policy documents.

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The 'Competitive' Value of Music to Commercial Radio Stations

Review of Economic Research on Copyright Issues, Vol. 4, No. 2, 29-50, 2007

Paul Audley and Marcel Boyer

Downloads:  1132


Our objective in this paper is to develop a methodology to infer from the behaviour and choices of broadcasters the "competitive" value they attach to the use of music, more precisely sound recordings, and to derive from such an inferred value the proper "competitive" copyright payments to be made to authors, composers, performers, and makers of sound recordings. We illustrate the methodology by applying it to Canadian data. The background is provided by the statement of case and supporting proof presented in the 2004 proceedings before the Copyright Board of Canada on the commercial radio tariff. The results called for a significant increase in copyright payments by Canada's commercial radio industry: the proper competitive copyright payments should be substantially more than double what the industry was paying at the time of the hearings.

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Bargaining Theory and Royalty Contract Negotiations

Review of Economic Research on Copyright Issues, Vol. 3, No.1, 19-27, 2006

Abhinay Muthoo

Downloads:  1126


This article shows how the principles of modern bargaining theory can help develop a better understanding of contractual terms such as royalties between copyright holders and users such as between an artist and a recording company (or between an author and a publisher). We develop the main principles in a non-technical and illustrative manner.

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Copyright Levies as an Alternative Compensation Method for Recording Artists and Technological Development

Review of Economic Research on Copyright Issues, Vol. 2, No. 2, 25-39, 2005

Ville Oksanen and Mikko Valimaki

Downloads:  1108


The idea of alternative compensation methods for recording artists has gained increasing popularity as Internet copying has started to seriously threaten record sales. We start this article by looking at the general theory on alternatives to copyright royalties and show that recording artist income is in practise not dependent on record sales. Then we move forward and map the features of the current alternative proposals and construct yet another iteration of a levy-based compensation method. As an example, we analyze what our model would imply for Finland. In the end we reflect on the idea of a levy-based compensation method to the current predictions of technical advances in communication networks and note that the traditional copyright royalty model is seriously threatened by tremendous personal copying covering practically all the music ever created. We conclude this article by discussing what this will mean for the alternative compensation proposals and the music industry in general.

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Museums, Property Rights, and Photographs of Works of Art. Why Reproduction Through Photograph Should Be Free.

Review of Economic Research on Copyright Issues, 13(1), 1-28, 2016

Alain Marciano and Nathalie Moureau

Downloads:  1100


The law concerning the reproduction of works of art is unambiguous: the owner of the physical item does not own the right to copy and reproduce it. The copyright or right to reproduce a work of art either belongs to the artist and his/her heirs, or to everybody when the work is in the public domain. However, a large number of museums use their property rights to assume a copyright, i.e. a right to reproduce works of art. These illegal practices are the result of choosing a business model based on the desire to cross-subsidise the upstream market of the services provided to the public with the benefits obtained by monopolising the "downstream" market of the copies or reproductions of works of art. The objective of this paper is to show that this is not efficient. We argue that this strategy conflicts with the mission upheld by museums and prevents certain externalities from circulating in the society.

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Why Did Schumpeter Neglect Intellectual Property Rights?

Review of Economic Research on Copyright Issues, Vol. 2, No. 1, 69-74, 2005

Mark Blaug

Downloads:  1091


Joseph Schumpeter is the father of evolutionary economics and the origin of notion that technical change is the key to capitalism as an engine of economic growth. His most famous book is Capitalism, Socialism and Democracy (1942) which develops the thesis that capitalism is always an evolutionary process of creative destruction. When this book was published fifty years ago, there was little solid scholarship on technical advance. Now there is a great deal, so much so that it would take a book to do justice to it. Nevertheless, Schumpeter's book correctly captures many of the stylised facts about technical progress revealed in recent research but, oddly enough, he never discussed, or even mentioned, intellectual property rights and this despite the fact that patent legislation was a prominent subject of debate in nineteenth century economics. This is a puzzle I hope to resolve in this paper.

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The U.S. Copyright Termination Law, Asymmetric Information, and Legal Uncertainty

Review of Economic Research on Copyright Issues, 2019, vol. 16(1/2), pp. 1-39

Michael Karas

Downloads:  1083


This paper investigates the conflict between authors and their publishers that occurs as a result of publishers using an ambiguous “work made for hire” clause to sue the author for copyright infringement. A Bayesian signaling model allows a publisher to send an informative signal to the uninformed author that includes his reaction towards a license termination to induce termination deterrence. The model is used to examine the effectiveness of the statutory intervention. The results reveal that complete termination deterrence is an equilibrium outcome only if a publisher sues with certainty. The mere threat to sue is not sufficient for complete termination deterrence. Under most parameter settings, the results indicate positive termination probabilities. The highest probability for a neutral publisher type is obtained in situations where an author has weak outside options or is strongly dependent on his publisher. An author with valuable outside options increases the probability that a publisher will threaten to pursue legal action. If courts tend to favor authors, then termination incentives increase, which may lead to more friction between authors and their publishers.

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Evidence of the Effect of Free Music Downloads on the Purchase of Music CDs in Canada

Review of Economic Research on Copyright Issues, 9(2), 55-78, 2012

George Barker

Downloads:  1069


This paper examines data on the effects of Internet peer-to peer (P2P) file sharing activities on music purchasing. The data was obtained from a survey commissioned by Industry Canada to "inform Industry Canada's policy development work" regarding copyright law reform in Canada. The paper focuses on an important survey question which has not yet been analysed. Analysis of survey responses suggests that P2P file-sharing is a substitute for legitimate music purchases and has strong negative effects on legitimate music purchases. This contradicts the results of earlier analysis of the data commissioned by Industry Canada first published on Industry Canada's website in 2007 (Andersen and Frenz, 2007), and then subsequently revised and republished as Andersen and Frenz (2010).

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Indirect Copyright Infringement Liability for an ISP: An Application of the Theory of the Economics of Contracts under Asymmetric Information

Review of Economic Research on Copyright Issues, 2018, 15(2), 57-79

Richard Watt and Frank Mueller-Langer

Downloads:  1034


Under current copyright law in many countries, Internet Service Providers (ISPs) can be found liable for the traffic on the websites that they host. While the ISPs themselves are not undertaking acts that infringe copyright, indirect liability asserts that they either contribute to, or encourage in some way, infringing activities, and thus they are liable to claims of indirect involvement by the affected copyright holders. The present paper explores indirect liability in a standard principal-agent setting, where both moral hazard (the act of monitoring) and adverse selection (differential costs of monitoring over ISPs) are present. The model considers the kinds of contracts that could be signed between the copyright holders (acting through a collective) and the ISPs (acting individually). We specify the contracts that are self-selecting and incentive compatible for the set of feasible scenarios.

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Intellectual Property Regulation and Software Piracy: A Dynamic Approach

Review of Economic Research on Copyright Issues, 2018, 15(1), 38-64

Michael D'Rosario

Downloads:  1022


Promoting Intellectual Property Rights (IPRs) is of particular importance to nations engaging in significant innovation. The existing literature relating to software piracy research is typified by the use qualitative methods to analyse the impact of IPRs on software piracy. Most concern themselves with a handful of important macroeconomic factors in an effort to identify whether they possess any explanatory power, employing qualitative frameworks for analysis. More contemporary research has given greater attention to the role of key regulatory variables on software piracy using econometric methods. In this paper, the relationship between foreign political pressure, IPR regulatory reforms and software piracy is considered. We estimate a model of software piracy as a function of bi-lateral pressure and investment (where US 301 reporting is the proxy for bilateral pressure, and capital investment the proxy for bi-lateral investment), Scientific investment, trade dependence and government effectiveness. The models are estimated using data from 80 countries over nine years. The study responds to the dearth of research employing dynamic panel estimations in estimating the impact of IPR reforms on software piracy. The findings suggest out of cycle review and US 301 reporting are pertinent factors potentially moderating software piracy.

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Unauthorized Copying and Copyright Enforcement in Developing Countries: A Vietnam Case Study

Review of Economic Research on Copyright Issues, Vol. 4, No. 1, 87-96, 2007

Koji Domon and Kiyoshi Nakamura

Downloads:  1020


At present, Vietnam is regarded as the most notorious country regarding copyright infringement. China, joining WTO in 2001, has since implemented strict copyright measures. Even though Vietnam has laws covering intellectual property rights, enforcement is almost non-existent. We investigated how unauthorized P2P file-sharing affects copyright infringement in Vietnam. We assumed, before visiting Vietnam, that P2P file-sharing was more popular than pirated CDs and DVDs. However, few people there knew of its existence. Even when they did, they were unwilling to use it. Another astonishing fact was how pirated CDs play a role in promoting singers who relied on stage performances. Singers were not eager to support copyright enforcement. In this paper we consider these situations and explain how such behavior is commonplace in Vietnam.

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Capabilities, Spillovers, and Intellectual Progress: Toward a Human Flourishing Theory of Intellectual Property

Review of Economic Research on Copyright Issues, 14(1/2), 1-38, 2017

Brett M. Frischmann

Downloads:  1007


Courts, commentators, and even casebooks mistakenly assume that intellectual property laws are fundamentally utilitarian and thus the relevant objective for intellectual property laws is maximizing social welfare. Economic theories of intellectual property dominate while rights-based theories and other alternatives struggle to remain relevant in the discourse. This essay accepts that intellectual property laws are consequentialist, but it mounts a challenge to the utilitarian theories that dominate. Following the path set by Amartya Sen in the area of development economics and borrowing heavily from the Sen's analytical and normative framework - the Capabilities Approach, this essay begins to develop a human flourishing theory for intellectual property.

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Piracy and the Demand for Films: Analysis of Piracy Behavior in French Universities

Review of Economic Research on Copyright Issues, Vol. 3, No. 2, 15-27, 2006

David Bounie, Patrick Waelbroeck and Marc Bourreau

Downloads:  1002


The purpose of this article is to identify which, if any, segments of the movie business have suffered from digital piracy. We use a sample of 620 university members including undergraduate students, graduate students and professors to assess the effect of digital piracy on legal demand. A large percentage of respondents get pirated movies from a variety of channels (on P2P networks, intranet, by physical means. . . ). Surprisingly, approximately one third of the pirates declared that watching pirated movies increased their demand for films (for instance, it led them to rent or purchase videos that they would not have rented or purchased otherwise). Using regressions analysis, we find no impact of piracy on theater attendance, and a strong impact on video rentals and purchases. However, movie piracy has no impact on video rentals for respondents who use pre-paid pricing schemes at video-stores.

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Creativity and the Economics of the Copyright Controversy

Review of Economic Research on Copyright Issues, Vol. 6, No. 2, 5-12, 2009

Harold Demsetz

Downloads:  1000


The debate about copyright law centers on the apparent tradeoff between the creation of new works and the extent to which these works are used once they are created. Economics has been employed explicitly and implicitly to bolster positions taken by those involved in this debate. I do not directly join this debate here, but what I will say is relevant to it. My objectives are different, to draw attention to the neglect of creativity by economists and to describe some of the unique problems this neglect poses for those who use traditional economic models to explain and support the positions they take in this debate. It is no intent of mine to discourage the use of traditional economic models but, rather, to urge greater care in their use.

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